Twitter Gains 5 Million Users in Q3, Misses Earnings Expectations on Litigation-Settlement Charge

Twitter touted user gains in the third quarter of 2021 and reported healthy growth in revenue, but it dramatically missed Wall Street earnings estimates.

The company said average monetizable DAUs reached 211 million in the quarter, up 13% year over year, a net gain of 5 million in the period. Average U.S. mDAUs were 37 million for Q3, flat with the prior quarter.

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Q3 revenue totaled $1.28 billion, an increase of 37% year over year. ○ US revenue totaled $742 million, an increase of 45% year over year. Net loss was $537 million, representing a net margin of -42% and diluted earnings per share of -67 cents. The loss in the period includes a one-time litigation-related net charge of $766 million for Q3, related to the company’s agreement to settle a class-action lawsuit alleging Twitter and its executives provided misleading user-engagement info to investors.

On average, financial analysts expected Twitter to post $1.28 billion in revenue and adjusted EPS of 15 cents, according to Refinitiv data.

Twitter shares rose 2.9% in after-hours trading, as investors were encouraged by the social network’s positive Q4 guidance. For the fourth quarter, Twitter expects revenue to be between $1.5 billion and $1.6 billion and operating income to be between $130 million and $180 million.

“I am proud of our third quarter results,” Twitter chief Jack Dorsey said in a statement. “We’re improving personalization, facilitating conversation, delivering relevant news, and finding new ways to help people get paid on Twitter.”

Meanwhile, Twitter’s stock-based compensation expense in Q3 rose 42% year over year, to $164 million. The company forecast Q4 stock-based compensation expense to be about $175 million.

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